Lindt & Sprungli has reported a 9.3% increase in net profits. The Swiss chocolate company had a good year, with healthy growth in sales and profits. The US was a particularly strong market, as consumers are rethinking their spending in the face of economic uncertainty and splashing out on little luxuries rather than major purchases. Lindt should do well in 2001 – but it will have to watch out for rivals also on the lookout for sweet success. It’s nice to know that the US market isn’t a disappointment for everybody right now. With a focus on premium chocolates, Lindt & Sprungli is providing little luxuries that people aren’t afraid to splash out on. The US has now become its most significant market with above average sales growth. Including the impact of US-based Ghirardelli Chocolate Company, which the company bought in 1998, the American market made a considerable contribution to Lindt’s sales and profit growth.

Net profit was up 9.3% for the year, growing from $41 million in 1999 to $44 million in 2000. The group’s earnings before interest and taxes increased by 10.4% for the year, from $76 million to $84 million – despite an extraordinary expenditure of $1.75 million related to the sale of Ghirardelli’s manufacturing facilities in Wisconsin. Sales growth also well exceeded the market average. Sales were up 6.7% in Swiss francs to $0.9 billion, and in local currencies the increase was 5.7%.

Lindt’s growth is impressive. The chocolate market is mature and companies have been suffering from excess capacity in the industry. There has been a slight upturn in European chocolate sales, but Lindt has benefited more than most. The group has been successful in raising consumer awareness of quality products and there is no reason to think they won’t continue to make progress. Certainly the premium confectionery sector is a pleasant one to be in right now. Despite hesitance to make really expensive purchases, consumers don’t want to feel that they are scrimping and saving just yet.

A little bit of indulgence eases the mind and Lindt is in the right position to taste the benefits. But it will also have to watch out for rival chocolate makers attracted by the premium sector and trying to tempt away its customers.

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